Washington's Flagship Business with China

One cannot begin to talk about U.S.-China relations, not to say WA-China relations, without mentioning B-O-E-I-N-G. President Nixon may have broken the ice between the U.S. and China with his 1972 trip to the Middle Kingdom, but he flew there on a Boeing 707. The whole U.S.-China trade really began when the Civil Aviation Administration of China ordered 10 Boeing 707s that same year, five years before the normalization in 1979. Today, over 50% of China’s fleet of 2,570 commercial jetliners are Boeing airplanes. China is also forecast to surpass the U.S. as the largest civil aviation market by 2034, with a need of 6,330 new planes worth $950 billion, according to Boeing vice president Randy Tinseth. Boeing (China) Co. Ltd. now has 250 Boeing employees in China and more than 6,000 employees at Boeing’s various businesses, subsidiaries and joint ventures. More than 8,000 Boeing airplanes fly throughout the world with parts and assemblies built by China. For more information, visit the web page here.

With its founder/chairman Bill Gates greatly admired in China, Microsoft has, however, a very different China story than Boeing’s. One word: piracy. Gates famously said once that if people in China were going to pirate anybody's software he'd certainly prefer it be Microsoft's. Entering the market in 1992, Microsoft later opened a research center in Beijing in 1998, with around 250 researchers and developers and more than 300 visiting scientists and students. It also ran training programs for Chinese teachers and software entrepreneurs and financed model computer classrooms in China's rural areas. Still its revenue in China in 2011 was only about 5% of that in the U.S., or less than that in the Netherlands, according to its former Chief Executive Steve Ballmer. In 2014, China banned Windows 8 on its government computers and also launched an antitrust investigation of Microsoft. For more information, visit the web page here.

Xing-Ba-Ke, as it is known in China, is perhaps the biggest and most unlikely success story. Opening its first store in China only in 1999, today, China’s is Starbucks biggest growth market, with over 1700 stories in over 90 Chinese cities, and employing 25,000 there. In 2013, Starbucks was criticized in China for charging higher prices there than in other markets. It didn’t seem to have affected anything. According the Puget Sound Business Journal, earlier in 2015, Shanghai, China, surpassed Seattle as the city with most Starbucks stores; and in the next five years, Starbucks plans to open 1,600 more stores in China. As John Culver, Starbucks Group President of China and Asia Pacific, told USA Today, China was Starbucks’ 'second home' market outside of the U.S. The ingredient of Starbucks’ success? Selling a lifestyle, an experience, a Seattle experience, an American experience. For more information, visit the web page here.

In 2004, Amazon took over China’s then largest online bookstore Joyo.com and turned it into Amazon’s regional store in China. It became Amazon China in 2011. However, the largest online retailer in the U.S. has a formidable rival in China: Alibaba, the largest e-commerce company in the world. As founder Jack Ma said, Alibaba was the crocodile in the Yangtze, which defeated Ebay, a shark in the ocean. In the same way, Amazon is an American shark having a hard time going against the giant local Chinese crocodile. Fortune reported earlier in 2015 that with its e-commerce market share in China remaining less than 1.5%, Amazon opened a store on Alibaba’s Tmall site, a different approach. However, according to IB Times, founder Jeff Bezos is now more focused on winning in India than turning around in China. For more information, visit the website here.

A sweet Washington success story, Brown & Haley, the nation’s third largest manufacturing wholesaler of boxed chocolates, was founded as early as 1912 by two men in Tacoma. In 1990s, Almond Roca, the crunchy, log-shaped candy with butter inside and a coating of chocolate and diced almonds on the outside, became the largest exported gift candy in the U.S. First in China in 1988, by 2011, Brown & Haley received 20% of its revenue from the Greater China market, including Hong Kong and Taiwan, half of it from China, estimated to be $10 million a year, according to Seattle Business. Along with Almond Roca's popularity in China came a familiar image of a Washington state governor, be it Gregoire or Inslee, promoting Almond Roca in China. Seattle Business described Brown & Haley as “one small company made it big in China.” For more information, visit the website here.

It is well known that Washington sells a lot of apples, cherries and pears to China, especially when Jack Ma of Alibaba wrote last year in the Wall Street Journal that in 2013 farmers in the Pacific Northwest sold 180 tons of cherries to China via Alibaba’s platform and sales in 2014 more than tripled, to 600 tons. The Northwest Horticultural Association, located in Yakima, WA, represents the growers, packers and shippers of apples, pears and cherries in Idaho, Oregon and Washington. The Council said that historically, some 90% of U.S. apple, 92% of U.S. pear and 65-75% of U.S. sweet cherry exports originate from the Pacific Northwest, predominantly from Washington state. 2013 and 2014 were milestones for Washington’s fruit industry as China granted respectively full market access to Washington pears and full varietal access to Washington apples. For more information, visit the website here.